something that's trending on the web right now. it's this white house photo showing president obama and olympic gymnast mikala maroney looking not impressed. the president was having a little fun with maroney who had that same face when she finished the vault. that look went viral. i'll be back and show you how the twinkie is iconic in mexico. that's right, mexico. stay with cnn. "your money" starts right now. this is the economic storm of our own making and it's threatening any chance of a sustained recovery. i'm ali velshi. this is "your money" and i'm going to show you the damage america could do to itself if washington allows us to go over the fiscal cliff. unemployment in the u.s. which has come down to to 20.9%, it

could go up another 9%. according to a new research new york post poll, you clearly understand the danger of this fiscal cliff. 50% say it will have a major effect on the economy, 21% say a minor effect, 2% no effect, 10% say they don't know, which is why you're watching this right now. president obama says they're centering around increasing tax on the wealthy which will go a good way in increasing the revenue that he wants to raise in the next decade in an attempt to reduce the federal deficit. he wants to reinstate the bush tax cut which goes to the top 2% of earners. that would jump from 36% to 39%. he likes to say that's where it was during the clinton years. the second one would go from 36% to 39%. he's been focusing on this

specific number since his reelection which suggests he may compromise on the actual rates in order to get a deal. there are other taxes as well he's talking about. taxes on investment gain would also go up. the capital gains tax would go from 15% to 20% and dividend taxes would go from 50% to the income tax rate. as i showed you, 39.6%. president obama argues this will hurt people with savings and dividend stocks, but the overall investment gains are enjoyed by the wealthy. this, again, would target that rich group that president obama is talking about. but that's not all. the president also wants to raise an additional $500 million by limiting the value of deduction that high-income ho e households now enjoy. and he wants to use the so-called buffett rule for tax reform, the goal making sure that anyone who makes more than $1 million pays a minimum of federal taxes regardless of what deductions and other credits are

otherwise available to them. we'll hear more directly about that from warren buffett later in the show, but this show is more about politics and economics. right now remember that in 2010, president obama vowed to eliminate the bush tax cuts for the rich. he folded back then. he allowed them to be renewed for another two years, but this time he campaigned on letting them expire, and fresh off his election once again, staring down a republican-led house, the president is warning the wealthy that they will pay more. >> what i'm not going to do is to extend bush tax cuts for the wealthiest 2% that we can't afford and, according to economists, will have the least positive impact on our economy. >> now, in return for the tax revenue, the president says he will negotiate with congress on spending cuts. he claimed the cuts together with the revenues from raising taxes on the rich would reduce the federal deficit by $4 trillion over the next decade.

that's the president's plan, but without a compromise with the republicans, america could be headed over the fiscal cliff. joining me is mohammmaed al ari. mohammad, welcome back to the show. you predict republicans in your words will shout and scream but ultimately they will go along with the tax hike for the sake of avoiding an economic disaster. it was the president, not mohammad, that blinked back in 2010. why do you think republicans will back down now? >> i think it's different this time around. first, nobody wants to go over the fiscal cliff. as you said, this implies a recession, it implies unemployment going up, and it implies us shooting ourselves in the foot at a time when the global environment is much more difficult. see what's happening in europe, in the middle east, in china. second of all, you just had an

election, and one of the messages of the election was one of shared responsibility and fairer burden sharing, in which the rich have done extremely well not just on the outside but also in terms of being protected on the down side. finally, and more importantly, the economic arguments against this, while they would be valid at higher tax rates are not valid here. so if you look at the hand the president has, it is stronger than the republicans', and i think both of them will want to seek some sort of compromise. >> it sounds so reasonable. let's bring in steve warren. he's an editor at the wall street journal, a conservative. steven, do you agree, are the republicans ready to strike a deal with the president if it means giving up the bush tax cuts for the wealthy? they have dug in on this. >> i don't know, ali. i listen to this conversation and i feel like i'm living in france. i see no economic wisdom in raising tax rates in an economy that is so fragile right now and a recovery that looks like it's losing steam. you saw what happened with the

unemployment numbers this week. now, some of that was due to the storm, but this is not an economy that's kicking on all cylinders. it's barely kicking on one cylinder. what i don't understand about what you and mohammad are saying is how in the world do you get the economy to grow faster if you're going to raise tax on businesses f you're going to raise tax on investments -- >> the issue is compared to what. >> exactly. >> you don't want taxes on the rich to go up. compared to the risk of a fiscal cliff, do you think republicans in the house will look at that and say, we don't want to incur the wrath of the american people if we go over this fiscal cliff? >> mohammad might be right about the politics of this. what i want to talk about is the economics of it. what i'm saying is it is insane. it is so dangerous to be talking about -- explain this to me. how do raising taxes on the wealthy and businesses help people get more jobs? i mean, really. >> is it really insane to go from 36 to 39.6? i would say going from 36 to 59.6, 49.6 might be bad.

i'm not an economist, i'm just saying is that really insane, and might you have heard in the president's comments in the last week the possibility of compromise? you know, he stopped talking about this 39.6%. i don't know if i'm the only one that noticed this. >> what we want stod lower our tax rates to be more competitive, not raise them. i just don't see any economic wisdom in it. i covered this in my editorial in the wall street journal this week. the periods when kmet has really grown is when we've been cutting tax rates. here's one last point, if i may. i listen to do that whole press conference the president gave the other day, and here's what struck me. i didn't hear him one time talk about cutting government spending. >> come on, come on, you went to the soda machine if you didn't hear it. i agree with you, he was vague and he was a little unspecific, but he did say it is time to take a hard look at entitlement, it's time to take a hard look at spending. >> but he didn't put anything on the table. this has been four years of this president. what spending cuts?

they're not in his budget, they've never been in his budget. here we are opening up a new session. i'm suspicious those cuts are ever going to come. >> mohammad, are you suspicious those will ever come? i imagine i could go down to the corner store and something could design something to avert the fiscal cliff because they get that taxes may have to go up on the rich, whether or not you agree with it, and they get that spending has to be cut. >> so i think they're going to come. i think we will see reforms both on the tax side, which is based on rates, and the expenditure side. a couple of issues. saying we're like france is like those who say we're like greece. we are not like france, we are not like greece, we are the united states of america. and i agree with steven that we need to invest in our growth engines. but that is going to materialize if we deal with our fundamental issues. our fundamental issues is not a tax rate of 36 or 39, our fundamental issues is that we haven't invested enough in our people, in our plants, in our

equipment and in our infrastructure. we need private and public partnerships. so it's critical, and steven is right to raise it, it's critical that this fiscal cliff debate not crowd out the issue that we as a nation have distinct problems. two much debt, too little growth and to this function of political system. we need to address all three in a holistic manner. i do not think that the difference between high growth and low growth is a tax rate of 36 or 39% on the rich. it is much more whether we are enabling -- enabling -- our citizens and our companies to produce and to prosper on the fundamental reform. >> i think we agree that infrastructure, public partnerships, too much debt, too little growth is what the problem is. if we don't get a handle on that, in ten years we might be sitting here thinking we are a little bit more like greece. good to talk to you guys. >> i don't want to be like greece or france. >> we all agree on that point,

too. good to see both of you. steven moore is a managerial writer with the wall street journal. alan greenspan ended a nearly two-decade run in january of 2006. the economy was strong but the seeds for the 2008 financial meltdown had been planted. >> the actual current in 2008 surprised me with respect to the size of what the problem was. >> so how would alan greenspan handle the current threat of an economic storm that threatens america today? the former fed chairman speaks to me about the fiscal cliff, the bush tax cuts and why he would let the u.s. flip into a recession to solve america's long-term debt problems. a rare interview with alan greenspan up next.

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alan greenspan had a front row seat to some of the biggest events in the last 20 years. when he was put in as chair, he led the central bank in the central economy through good times and bad. now six years after he left the job, his successor ben bernanke is warning of the danger of

plunging over the fiscal cliff. i've been warning you of the problems it could have on america's already fragile economy, but i spoke with alan greenspan and asked him point blank, do you agree that the u.s. could go into a recession as a result of the fiscal cliff? >> most certainly. but remember, all of these forecasts come off the metric models which didn't catch the 2008 crisis. so we have to be very careful about using them to evaluate this type of problem. >> the last time washington faced the expiration of the bush era tax cut back in 2010, you said in interviews they should follow the law and let them expire for everyone. now, putting aside the other parts of the fiscal cliff, do you still feel that all americans should see their income tax rates rise? >> i say that this crisis is going to be extraordinarily difficult to resolve. in other words, the crisis i'm

referring to is not the fiscal cliff crisis but the broad crisis with respect to debt. we have had had an inexorable rise in the rate of spending on so-called special benefits. and as i mentioned before, this is both republican and democrat and neither one of them get a hold on this. but what the data very clearly show is that as social benefits rise, the savings, the domestic savings of the american economy declines and that is basically the root source of funding for capital investment, and capital investment is where productivity comes from and productivity is where economic growth comes from. so unless and until we recognize that we've got to slow the pace and, in fact, reduce the level

of benefits to allow savings to come through and that will create the fact that economic growth which will enable us to fund the social benefits, we're running into a stone wall here in which the more social benefits we have which we don't contain, the lower the rate of savings, the lower the rate of growth and the less the quantity of real resources to fund the benefits. this is obviously an unsustainable situation, and the sooner we come to grips with it the better, and i raise the issue of allowing the bush tax cuts to rescind on schedule was not that i want taxes to go up, i think it's a terrible idea. relative to what? i mean, if we don't close this deficit fairly quickly, we are in real trouble.

remember, it's always easier to cut taxes politically than it is to cut spending. so if you have to allow a significant rise in taxes to essentially cut a deal on a major benefit cut, that's a good deal for me because it's always easier in the future to cut taxes than it is to cut spending. >> so let me ask you this. we can get to that 3% growth and 4% and beyond, it becomes a virtuous cycle. can that happen? could there be immediate tax cuts we're looking at now help get us there? >> look. imf studies show definitively that if you cut spending in a situation like this, it does lower the gdp but nowhere near the amount the increase in taxes lower the rate of increase in

the gdp. so i think that if we have to have a moderate recession to solve this huge fiscal problem that's in front of us, i think that is a very small price to pay. because we're not going to get out of this thing without paying. there's a presumption here that we have a whole schedule of economic policies which can just basically solve the problem as though it is a normal situation. it is not. this is an extraordinarily unprecedented situation, and unless and until we rein in the spending growth, this economy can't function. >> the economy can't function. so he's saying a little recession is better than the idea of raising taxes on everyone. a fascinating conversation with the former fed chairman. you can hear more of it on cnnmoney.com. this country's fiscal house needs to be put in order. the president says you do it by taxing the rich.

so does warren buffett. coming up next, why the tax man must cometh for all of us. whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. [ gordon ] for some this line is a convenience. how you doing today? i'm good thanks. how are you? i'm good. [ gordon ] but for others, it's all they can afford. every day nearly nine million older americans don't have enough to eat. anything else? no, not today. join me, aarp, and aarp foundation in the drive to end hunger by visiting drivetoendhunger.org.

at meineke i have options... like oil changes starting at $19.95. my money. my choice. my meineke. it was a key theme of the president's reelection campaign. the rich need to pay more and the middle class must be spared. in fact, the president made the case again this week. >> if congress fails to act by the end of this year, everybody's taxes will automatically go up, including the 98% of americans who make less than $250,000 a year. and the 97% of small businesses

who earn less than $250,000 a year. that doesn't make sense. our economy can't afford that right now. >> now, arguably, talk like that separating a rich from everybody else got the president another four years, so now i'm going to take a politically unpopular position. the middle class is not paying its share. yes, you. your taxes must rise. now, before you throw your remote at the dv set, just hear me out. our debt is on an unsustainable path. the no one-partisan budgets office says if we avoid the fiscal cliff and nothing changes -- take a look at this, this is the relationship between debt and gdp -- u.s. debt will be the equivalent of 93% of gdp by 2022, that's ten years from now, and nearly 2%. double everything we do in this economy by 2037. basically, we could end up like greece. to fix it, we need more revenue.

not just from the top 2%. your politicians have not told you the truth about this so i will. soaking the rich while quite possibly necessary simply doesn't provide the revenue to close our massive budget gap. the middle class is where the money is, economically speaking. it's where most of the money should be, by the way. even if you confiscate it, and i am not suggesting this, but even if you confiscated 100% of income of the families making above $250,000 a year, you would only get about $2 trillion. we need double that to make a serious dent in the debt. the middle class cannot be exempt if we're going to dig out of this hole. raising taxes would raise $4 trillion over the next decade, putting us on a more sustainable path. i know we're in a fragile recovery and raising taxes on the middle class could hurt. it could even mean a brief recession, but i'm talking about

putting communal interest over self-interest. right now raising taxes on middle class families, the popularity is near historic lows. a family of four has an effective tax rate of just 5.6%. that is the lowest -- the lowest -- since the 1950s. i'm not suggesting a massive tax increase, but there is definitely room for taxes to rise, and our collective future may well depend on it. joining me now is robert rice. he's a professor at uc berkeley and a former adviser under president clinton. he's also the author of the book "beyond outrage." bob, good to see you. >> good to see you, ali. >> i say we need to raise taxes on the middle class -- >> i disagree. >> tell me why i'm wrong. >> i have great respect for you, a ali velshi, but i think you're wrong. number one, the median income in

america right now is about $52,000 per worker, family income is about 55,000. that's been declining. the middle class is actually about 8% less. the typical middle class family, 8% lower wages than it had in the year 2000. and it's been paying more taxes, not less taxes. if you consider sales taxes which have gone up dramatically, you consider social security taxes which over the last 20 years have continued to rise, you consider property taxes. the middle class is paying out their ears with regard to taxes, ask finally the middle class is critical to a recovery. that's where the demand in the economy comes from. they are the job creators because it's their spending that actually creates incentives for businesses to expand and create more jobs. you don't want to put an added tax burden on the middle class. >> look, laudiblely, liberals want to protect the most vulnerable in society by ensuring employment benefits and food stamps and housing

subsidies and heating, but if you have the middle class pay more for these things, aren't you endangering the ultimate demise of those services because we won't get economic growth? >> most middle class people, ali, don't take advantage of the safety net programs you are talking about because most middle class people, if they're earning 50, $55,000 a family, they don't need those safety nets. those safety nets are in case somebody actually falls out of the middle class. but more importantly, the wealthy in this country, the top 2%, 3% have never been as wealthy. they're now taking home -- if you just look at the top 1% -- over 20% of total income. to look at the top 5%, they're taking home close to 28 to 30% of total income. that's where the money is. they're not spending it. it's not as if the economy needs their spending to keep going, because to be rich means you've already got most of what you want. i mean, they're the ones who

save. and their savings ordinarily are good for the economy, but in a global economy, their savings go around the world to wherever they can get the highest return. that's where we ought to be taxing. their tax rates have dramatically declined. before 1981 the top margeal tax rate in this country was 70%. now it's 35%. >> i hear you. >> but wait a minute, but this is important, ali, because a lot of wealthy people actually pay the capital gains rate of 15% on most of their income. so that's where we ought to raise taxes. >> bob, i'm not arguing that we should raise taxes on the middle class instead of raising it on the rich. i'm saying because president obama doesn't have to run again in a reelection, doesn't it give him the perfect opportunity to level with the american people that saying simply raising taxes alone doesn't raise the revenues. >> you're making a bugaboo, and

i think the most important thing is getting jobs, getting the economy growing. we don't want the government spending until the economy is really back to at least 6% unemployment or less, at least 3% growth or more. it would be -- >> fair enough. bob, always good to see you. i have great respect for you as well, you know that, right? >> i do. thank you, ali. >> always a pleasure to see you. former secretary of labor. they cannot agree on raising taxes. why? most republicans signed a pact never to raise taxes on anything or else. we'll talk to two congressmen who are willing to break the pledge. next. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts,

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the most immediate threat facing the country is the fiscal cliff, and the election results did nothing to change the balance of power that we've seen over the last two years. a democratic president called for taxes on the richest americans to rise is staring down a republican-controlled house of representatives that it poses any increase in taxes whatsoever. it's the showdown that demands compromise. all parties need to give something up for the greater good, but there is a problem, a big one. almost all the republicans in congress have signed a pledge not to vote for any net tax increases under any circumstances. it's the pledge authored by grover norquist, founder for american tax reform and it states, quote, one, impose any and all efforts to increase the margeal tax rate for individuals and businesses, ask tnd two, op any debt reductions and credits unless matched dollar for dollar by further reducing tax credits.

i'm joined by scott ridgell and steve nortorette. both of you signed the pledge but have now turned your backs on it. you're both saying your fiscal problems are too large and too dangerous not to consider every option. fa famed investor and famed supporter to raise taxes, warren buffett. only made one political donation this season and it was to you. >> even though he had signed that grover norquist taxes, he decided it was more important to pledge the constitution than the norquist. >> and you admired him. >> i did admire him and i sent him a check. >> did your decision to violate the pledge damage your support for fundraising and support from

big money donors? >> it did not. i go where the numbers lead me, and a careful analysis of our budget and trying to reconcile that with the americans for tax reform pledge led me to the clear decision that the pledge itself is an impediment to meaningful tax reform and also our tax code now presently yields just under 17%, and we haven't run our country on that yield since 1959, and that's a long time ago before medicare and medicaid were even on the table. so revenues have to come up, expenses have to come down, and i'm asking our friends on the other side of the aisle to help us on the expense side. >> uh-huh. congressman nortorette, you dieded not to seek another term in the house because of that fiscal crisis. i want to read to our viewers what you wrote on monday. we have a paralyzing gridlock in washington, even as we stair into the jaws of incredibly

serious challenges as a nation. it's time for republican soul-searching. it's time for grass-roots republicans all across the country to recognize that they have been manipulated by the special interests. it's difficult for you guys because you're constantly campaigning. >> i signed the norquist pledge back in 1994, 14 years ago, and it's a different world. the pressures our colleagues face is different than the ones i faced in the '90s with the explosion of the internet and, quite frankly, 24-hour cable news programs. it is a constant campaign, but i think that poll that you cited, the bank wants tied survsurvey, the numbers are about the same. people will make a mistake going forward saying, if the president says, oh, yeah, i have a mandate to do what i want, or if the republican says, i've got a mandate and i'm reelected. but if you go underneath the numbers, what they voted for is

they want both sides so work this thing out. >> congressman ridgell, you made this point earlier, that compromise does make everyone have to give up something. it was such a hard line to not budge on, so i suppose republicans and democrats can move on hard line expenditures, but on a poll conducted by pugh research, 53% said republicans in congress would be more to blame if we went over it, 29% placing blame on president obama. so at this point do you think if some of your republicans would disavow the pledge, the public would hold republicans less responsible for anything going wrong in the economy. >> if you look at the total package, we've got to address our fiscal situation. i appreciate the emphasis on this, because while we're facing a fiscal cliff here, and it's a

very serious one, the real problem, the underlying problem is the 700-point delta that we have between revenues and expenditures that threatens the foundation of our country. >> let me bring in congressman nortorette on that one. you're okay with raising taxes to fix the problem, but how far are you willing to go? would you turn down the kind of budget slashes that paul ryan wants to make, or are you just budgeting on the tax side? >> no, here's the deal. the number i would throw back to you is in the survey we concluded, 35% of republicans said they would forgive their republican member of congress if they voted to increase tax rates as long as the increased revenue went to solve the problems, not to go to more spending. and i think that that's the key. but i agree with scott, you know, the president sort of made fun of mitt romney's five-point plan, but i tell you what, if the democrats are willing to give on tax simplification, and

some people will pay more taxes, and then they bring a more serious proposal on the table to entitlement reform, there is a deal that can be had. i think both the president and speaker boehner have indicated they're willing to give that a shot. >> thank you, gentlemen. good to see both of you and thanks for your work on behalf of the american people. congressman steve nortorette of ohio and congressman john ridgelle from virginia. well, it could still push this economy over the edge. what president obama can do in his second term, next. is, nyquil doesn't unstuff your nose. what? [ male announcer ] it doesn't have a decongestant. no way. [ male announcer ] sorry. alka-seltzer plus fights your worst cold symptoms plus has a fast acting decongestant to relieve your stuffy nose. [ sighs ] thanks! [ male announcer ] you're welcome. that's the cold truth! [ male announcer ] alka-seltzer plus. ♪ oh what a relief it is! ♪ [ male announcer ] to learn more about the cold truth and save $1 visit alka-seltzer on facebook.

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president obama made some plans in his first term but he's bound to be dogged by them in his second term. the eurozone fell back into recession in the third quarter. that is the second time since the financial crisis began in 2009. modest growth from nations like france and germany couldn't make up for a slump across europe. unemployment has climbed as high as 25% in countries like spain and greece. that's the official unemployment rate. president obama will need to focus on this coming storm as it threatens america's shores for the u.s. stakes are too high not to get involved. now, the u.s. and the eu trade $700 billion in goods and services a year, making it the world's biggest trading relationship. what's more, that financial crisis in europe has resulted in an economic slowdown in asia which takes us to another foreign policy challenge, which is schin. trade between the two largest economies grew to $531 billion

in 2011, but economic output has fallen to just 7%. when u.s. firms like gm and caterpillar are expanding their presence there. president obama will need to me understand relations with the new leadership emerging in beijing, that with a wave of china bashing in the election campaign in which americans accuse china of stealing more jobs through currency manipulation or outright theft of intellectual property. closer to home, the president will have to address ties with its immediate neighbors. last year they blocked an extension to the keystone excel pipeline that would help deliver oil from the tar sands, the oil sands. highly controversial but productive sand all the way down to the gulf of mexico largely on environmental grounds. the state department is reviewing the pipeline route and the pipeline will likely get approval and get built, but either way, the evolution between canada and the united

states will grow. a major topic no doubt will be obama's goal for immigration reform. the domestic issue with regional economic implications for both the united states and mexico. so president obama has a lot to think about. joining me now, fareed zakaria. he is the host of fareed zakaria. you understand foreign affairs. let's talk about europe, first of all. during the campaign, you would get the impression that europe was the biggest threat to the united states. but if europe doesn't get its act together, you saw the trade between europe and the united states is greater. is the president worrying about that more? >> he's worrying about it. there's no danger of a lehman-like collapse in europe because they have essentially copied the federal reserve and has provided liquidity, so no crisis, no crash. instead what has happened is the slow motion crisis which is slow growth because europe has embraced austerity, they've cut a lot of government spending,

they've raised taxes to cut budget deficits, but the result is the economy is in a tailspin. obama can't do much, though, because welcome to the post-economy world. they don't want to hear from the americans. geithner tried to give them lectures about austerity and they said, thanks, but no thanks, we don't want to hear from you. this is the first crisis of the european union in which the united states is not a central player since really the 1920s. it is a new work of the europeans. the eu economy, as you know, ali, is larger than the u.s. economy. so i think what's going to happen is president obama is going to watch very anxiously because it, as you say, does have a huge impact, but i don't think there's much he can do about it. >> that's why they don't talk about it as much. china is more complicated. in europe we're more worried about the economy. in china, there are a number of issues. one are the economic issues that i talked about, low wages,

currency, manipulation, intellectual property theft and those things, and then there's the other issue, and that is that china and the u.s. do not see eye to eye on a lot of major issues that the world is facing right now. >> you're exactly right. the economic issues, i think, fundamentally can be dealt with. i think that as often happens when you deal with trade-related things in a campaign, everything that is said during the campaign of an american presidential campaign should be thrown into the garbage can. >> the chinese probably understand that. >> one hopes the chinese is sophisticated enough, but the system even in china is becoming more open and more transparent. maybe the leaders understand that, but the people on the street don't. they listen to mitt romney and that has an effect. if you watch the twitter and social media phenomenon in china, they responded very negatively to the american campaign. they said china has been turned into the scapegoat. >> let's talk about what's happening in the middle east. this situation is heating up between israel and the

leadership in gaza. what's your sense how this affects what president obama has to do? >> let's be clear, it's not really a war. israel will win. it's a very lop-sided war. on one hand you have the most popular military machine in the middle east, on the other side you have the inhabitants of gaza who have weapons that can't do very much. what's the long term strategy? what are they going to do about gaza? they have tried to economically choke it off. it didn't work. they have tried to kind of military operation before, once including a ground invasion. didn't really work. where are they going here? and that's where the united states can be helpful. >> fareed zakaria, always a pleasure to see you. thanks for joining us. >> thank you, ali. warren buffett has to go shopping. maybe he'll offer up his

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this week's cnn's poppy harlow scored an exclusive interview with warren buffett. he has been outspoken in the past particularly got taxes and what the rich should pay. what is he saying now that it's all on the front burn we the fiscal cliff. >> i was sort of shocked by his answer, you'll hear it in a minute. he wants to see higher taxes period. here's his take. >> we need to get our revenue up to about 19% of gdp, we need to get our expenses down to 21% or 21.5% of gdp. everyone knows that, and we're a long way from both sides.

$1.6 trillion happens to be 1% of gdp, so you're just moving up 1 percentage point by doing that. we'll need to cut expenditures very significantly too. >> what is the chance of the united states falling into a recession after the fiscal cliff? >> if we go past january 1, we are not going to be permanently cripple ourselves, even if 54 1 people can't get along. >> the ultimate discussion about the economy has to lead to growth and jobs, does he say anything about that?

>> both government your romney and president obama's plans put out that these taxes could create 40 million jobs in the next three years. that mathd really just doesn't add up. it's very tough to do that and see that happening. do you think that's at all realistic? >> it's silly to say this thing will create 2 billion jobs or which will cost 800,000 jobs, these people don't know, it will get them in the papers, it will get them on television, what will create jobs in this country are the same things that have created the last 200-plus years. the american economy works very well. we went through one of the great financial panics of all time and we have been coming back from that. and will continue to come back from that, but it doesn't happen

in a week or a month when you have the sort of cataclysmic panic that we have, really. looking at the economy has it stands right now, and looking at what we're facing. is it at all feasible to create 12 million jobs in the next two years? >> i don't think it's impossible. that would be 250,000 a month, and we have had periods in which that has happened. we are coming back, 12 million sounds like a stretch to me, but it's not impossible. >> i asked him do you think it's irresponsible for candidates to say things like this? they're campaigning to be

president, and i know ali, you're going to buy a dress. >> if i have to wear a dress because somebody created 12 million jobs, it will be a happy occasion. we'll continue the rests of this conversation. >> it's a really good and worth while conversation. particularly those who want to know how warren buffett sees the economy. the closing argument after the break. r less. that's one smart board. what else does it do, reverse gravity? [ laughs ] [ laughs ] [ whooshing ] tell me about it. why am i not going anywhere? you don't believe hard enough. a smarter way to shop around. now that's progressive. call or click today. [ grunting ] how they'll live tomorrow. for more than 116 years,

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well you heard it from warren buffett, taxes are going up on the rich. but is that going to be enough to tackle the debt? the math just doesn't add up. allowing the tax cuts to expire for everyone, unpalatable and as unpopular as that would be, would show growth